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The Costs Of Running A Trade Business

StrategyDriven Managing Your Finances Article | The Costs Of Running A Trade Business

Thinking of starting a business as a tradesperson? Trade businesses include the likes of plumbing, electrics, roofing, tiling, landscaping and window cleaning. They can be a popular business venture for those that have the skills – and they can be relatively inexpensive to start up compared to many other types of business. However, there are still costs that need to be budgeted for if you’re going to start a trade business. Below are some of the costs to consider when running a trade business.

Tools

Perhaps the most important cost to consider is acquiring tools. Pretty much every trade from pest control to tree surgery requires tools. Certain trades are likely to require more expensive tools than others – for example, a decent piano tuning kit can be bought for less than $20, while a decent commercial carpet cleaning machine will cost over $1000 to buy.

Buying used tools could be a way to save money. When it comes to specialist tools that you may only need for one-off jobs, it may make more financial sense to hire them. You can also lease tools, which can be cheaper upfront than buying, but potentially more expensive in the long run.

To work out exactly how much you need to spend on tools, make a list of all the tools you need. Then compare prices online to work out exactly how much all of these tools will cost. If you need to take out a loan, this will help you to know exactly how much to borrow.

Supplies/parts

On top of your tools, there will be ongoing supplies or parts that you’ll need to buy. These will likely vary from job to job and are something you should factor in when it comes to quoting a price.

The internet is one of the best places to look for niche supplies like boiler auxiliary equipment or pressure washing chemicals. More general supplies and parts may be possible to buy from a local store, although you may still find that you access greater discounts online. Some suppliers may even be able to offer loyalty discounts or bulk discounts for supplies and could be worth sticking with.

Travel

You also need to consider the cost of travelling to your clients. This will typically involve owning or leasing a vehicle. Some tradespeople simply use their personal vehicle. However, if your personal vehicle is too small for your tools or not business appropriate, you may have to consider acquiring a new vehicle (a separate vehicle could also give you the option to invest in branded vinyl wrapping).

Each job you do will cost you money in fuel, which is also important to budget for. Many trade companies will only serve customers in a certain area so as not to spend too much time or money travelling to clients. Of course, if your trade is very niche, you may have no option but to cover a larger area in order to source enough customers.

Licensing/certification

Some trades do not require you to have any licensing or certification. In other cases, licensing or certification may be compulsory. It’s worth looking into the regulations of your state to see what the case is.

Most companies need a business license, which can cost between $50 and $550 depending on the state and profession. Certification fees are likely to vary depending on where you obtain them from – in some cases, there may be multiple certification courses that you can take. Some may also have to be regularly renewed, which is something to budget into your running costs.


Insurance

In many cases, it is not mandatory to take out insurance as a tradesperson. An exception is if you hire employees, in which case you are obliged to take out worker’s compensation. You will also need auto insurance for your commercial vehicle.

Other types of insurance may be highly recommended depending on the trade. Public liability insurance is something that most trade businesses should consider taking out. This insurance scheme can help to pay out compensation if a member of the public is injured or their property is damaged as a result of your work. You could also consider insuring your tools against damage and loss.

It is worth taking the time to shop around for insurance as it could save you a lot of money. Some insurers may offer specialist policies catered to the risks of your specific trade. There are also trade business insurance packages that you can take out that combine multiple policies for a discounted price.

Marketing

Marketing is essential for attracting business. You will need to invest some money regularly into marketing if you want to generate customers and grow.

A website is the most basic marketing necessity. You can build a website yourself, or hire someone to build it for you. A DIY website is the cheapest option – nowadays there are drag-and-drop website builders you can use that don’t require any programming knowledge.

There are so many other types of marketing that you can spend money on including social media marketing, SEO, PPC ads, business cards and flyers. It’s worth experimenting with different forms of marketing to see what works. You can hire marketing agencies to help handle marketing for you – in such cases, make sure to shop around to get the best rates.

Tax

Every business has to pay tax on its earnings. You will need to file a tax return each year, which will need to be accurately calculated. You can do this yourself or you can hire an accountant (the latter can save you a lot of time and hassle, but is an extra expense to budget for). At the very least, you should try to invest in accounting software to help make bookkeeping easier.

A benefit of being self-employed is that you get to claim expenses, which can result in tax reductions. This includes all the costs listed above. This is why it’s important to record every expense, so that you can accurately deduct the necessary amount of tax each year.

Should You Apply for an Equipment Financing Loan?

StrategyDriven Managing Your Finances Article | Should You Apply for an Equipment Financing Loan?Can your business benefit from new equipment? Maybe it’s time to apply for an equipment financing loan. Here are some things you should consider first.

What is An Equipment Loan?

An equipment loan is a type of financing in which businesses can purchase new or used equipment. The purchased equipment secures the loan, and the term is typically for 3-5 years. Equipment loans are popular among small businesses because they provide a way to finance needed equipment purchases without having to dip into their working capital or risk their personal finances.

Benefits of Applying for an Equipment Loan

There are several reasons your business might benefit from applying for an equipment loan.  Take a look at some of the most common.

Finance New or Used Equipment

With an equipment loan, your business can finance the purchase of new or used equipment. This can be a great way to upgrade your operations without using your working capital.

Tax-Deductible

The interest on an equipment loan is tax-deductible, which can help reduce your business’s tax burden. In addition, you can write the entire principal amount off as a business expense.

Fixed Interest Rate

Another benefit of an equipment loan is that it typically has a fixed interest rate. This allows you to budget your payments since you’ll know exactly how much to pay each month

Down Payment May Not Be Required

Some equipment loans don’t require a down payment, which can be helpful if you don’t have the cash on hand to make a large purchase.

No Prepayment Penalty

Most equipment financing solutions come with no prepayment penalty, which means if your business can pay off its equipment loan early, you won’t be charged extra. This can save you money in the long run.

Fixed Monthly Payments

Equipment loans have fixed monthly payments, which allow you to budget for your expenses.

Things to Consider Before Applying for an Equipment Loan

Before you apply for an equipment loan, make sure to consider the following.

Purpose of the Loan

The first question you should ask yourself is about the purpose of a loan. Will the equipment purchased with the loan help your business grow? Will it improve your bottom line? If you can’t come up with a legitimate reason fow how your business will benefit from an equipment loan, it may not be the right choice for you.

Can You Afford the Loan?

The next question you need to answer is whether you can afford the loan. An equipment loan is a form of debt, and you need to be sure you can make the payments each month.

Equipment Collateral

You can use the equipment your business purchases as collateral for the loan. If you default on the loan, your lender can seize the equipment. Make sure you’re comfortable with this before applying for a loan.

Length of the Loan

The loan term for an equipment loan is typically 3-5 years. This is the time you have to repay the loan. Be sure you are comfortable with this timeframe before committing to a loan.

Interest Rate

The interest rate on an equipment loan is typically fixed. This means that the interest rate will not change over the life of the loan.

The Bottom Line

Once you have considered the benefits and drawbacks of an equipment loan, it’s time to decide. If your business could benefit from the new or used equipment, an equipment loan might be the right financing option. Be sure to look into various lenders, or work with a fintech marketplace like National, to find solutions suitable to your needs.

Operation Getting More Value In Business

As a business, providing customers with value for money. However, you mustn’t forget to ensure that your spending generates the best results too. Making your capital work harder will lift a great weight from your shoulders while also enabling you to pass some of the savings onto your clients.

So, how exactly can you ensure that all decisions are made in the best interests of your customers? Here’s all you need to know.

StrategyDriven Managing Your Finances Article | Business Financies

Assemble The Strongest Possible Team

The majority of business matters will be handled by your employees. Therefore, getting the recruitment process under control should be the first item on your agenda. This should be followed by an ongoing investment into their development both individually and as a team. The best ways to achieve this are through training and team building exercises. When they work harder, you’ll get more value for money on a daily basis. There is no stronger foundation for success.

Keep Assets In Good Health

Taking care of your business assets will unlock greater performance levels and prolong the lifespans. Keeping business vehicles in good health with the right gas oil is a significant step in the right direction. Meanwhile, computer system updates should bring telling results too. Even though the daily maintenance can have a very significant impact, you must learn to spot signs of faults. The sooner you act, the sooner you’ll restore their health. This should save a lot of money in the long run.

Research Your Purchases

You already know that customers want to get the best value for money when buying products or services. You should take a similar approach before completing your transactions. Simple ideas like using price comparison sites can work wonders. Likewise, you’ll want to check that any company you plan to do with business can be trusted. Falling victim of fraudulent activity or inadequate supplies will harm the venture and could be very hard to recover from. It’s best to be safe rather than sorry.

Know Your Demographic

Marketing is an area where only the best will do. Efficient marketing should be built around targeting a key audience. It’s impossible to impress everyone, but smarter research and insights will allow you to focus on the people that are likely to purchase. SEO, PPC, trade show stools, printed materials, and social media marketing can all be used to great effect. Remember to analyse the success of every campaign and make the necessary adjustments for ongoing success.

Avoid Bad Debts

While you obviously want to get as many sales as possible, you must not force thing when dealing with repayment plans. Good sales figures count for nothing if the money never arrives. Understanding bad debts and how to avoid falling victim to them is vital. While some people will default on payments, but you don’t want to let this become a major problem. Protect yourself in this manner, and your hopes of maintaining a positive cash flow will be greatly increased.

When the financial elements are under control, you can focus on actively driving the venture in the right direction.

How to grow sales on a downsized marketing budget

StrategyDriven Marketing and Sales Article | How to grow sales on a downsized marketing budgetBusinesses are often quick to slash marketing budgets in times of disruption, and the response to the recent economic upheaval has been no different. Global ad spend is predicted to fall by nearly $50 billion in 2020, with major organizations like Google cutting marketing budgets in half for the rest of the year. Most companies are either in startup or turnaround mode and looking to reduce expenses while maximizing the impact of their remaining resources.

Though marketing is largely seen as a “nice-to-have” versus an essential business function, it’s actually a critical aspect of any business that works to drive sales. For organizations already struggling in the wake of the COVID-19 crisis, freezing or scaling back on marketing can have dire consequences on business growth when it’s needed most.

How can business leaders confidently continue to invest in marketing during such a volatile time when both budgets and timelines are tight? The key is not necessarily to invest more in your marketing budget but to invest more wisely with strategic, data-based initiatives. That’s where segmentation comes into play.

By using data you probably already have on hand to group your clients or customers based on their value to your business, it’s possible to make the most of your digital marketing efforts to grow your revenue, fast. Though the concept of segmentation is nothing new, what is new is how quickly you can derive them and garner insights. In the past, investing in segmentation for your business could take months and millions of dollars. But with advances in technology, today it’s possible to get it done in days, not months or years, and take immediate action on the insights to boost your bottom line.

Whether you’re the leader of a startup without much digital marketing prowess yet, or a business that’s had to make marketing cuts in the wake of the COVID-19 crisis, segmentation can help you spend less and make more by empowering your marketing team to:

1. Target the right people

Segmentation allows you to identify the shared characteristics of your best customers and create detailed personas to inform your approach. Most businesses will have several distinct high-value personas, which can be grouped by a number of segmentation techniques, such as demographics, geographics or psychographics (the way people think, feel or behave). For example, a luxury car dealership might segment its customers by the attitudes and beliefs that motivate purchases (the need for speed versus family safety), whereas a grocery retailer might segment customers by demographics such as their age, education or profession.

A common mistake is taking a cookie-cutter approach by spending the same amount of money going after your high-value customer segments as your low-value segments. By determining the margins each type of customer brings to your business, you can stop wasting resources on unprofitable segments and instead more strategically focus your marketing efforts on targeting the customer segments that will deliver the greatest ROI, such as lookalike or adjacent audiences to your high-value customers. What’s great about digital advertising is that you can be incredibly specific about who you target. All the major platforms like Facebook or LinkedIn allow you to display ads to return customers, go after new audiences who are similar to existing customers or target an entirely new segment based on criteria you select.

2. Adjust your messaging

It’s not only important to determine who you need to target through digital marketing, but also what you need to say to those valuable audience segments. Generic messaging will likely have your best customers scrolling past your ads or tossing your email in their junk folders, so take what you discovered in your research about your high-value personas and tailor your content accordingly.

How you communicate with one segment versus another may be wildly different based on several motivating factors. For example, young parents and well-off retirees might consider the same pieces of furniture from a high-end retailer, but their motivations for purchasing them are very different. While young parents are more likely to purchase furniture that holds up well to long-term wear-and-tear from kids and pets, retirees might be drawn to more expensive pieces because they feel they’ve earned nice things. Segmentation allows you to truly understand these unique (but equally high-value) groups and create different pieces of marketing content that speak directly to each one.

This may seem like an obvious step, but when is the last time you really performed a robust segmentation and used that to inspire your messaging? The information you uncover may surprise you — especially if you have never segmented in the past, or haven’t for a long while. We have experienced such a significant cultural shift recently that the usual wants, needs and motivating factors of your clients or customers may have shifted as well. It might be time to take another look at your segmentation to craft more impactful messaging.

3. Tailor your product offering

In addition to who you’re targeting and how you’re targeting them with your digital marketing content, segmentation can also inform what you’re offering. With consumer needs and concerns changing over the past several months, this ability to strategically pivot your products or services based on data is more important than ever before.

Perhaps your data reveals that one high-value customer segment desires a trimmed-down version of your product or service, while another prefers a more robust option. The best course of action might be to create a streamlined version and a premium version in addition to your core product or service, and then map these offerings to their corresponding segments throughout your sales and marketing efforts. But you won’t know how to make this pivot until you really understand your customer segments and determine what needs they have.

Transitioning from a one-size-fits all marketing strategy to high-level segmentation, with the eventual goal of one-on-one personalization, simply won’t happen overnight. It’s an evolution that will take time, patience and trial and error. But the good news is, if you’re asking the right questions and tracking what’s working and not working, your segments can actually get “smarter” and more effective over time. Likewise, your creative team will become more experienced crafting the right messaging for the right clients or customer segments at the right time. This is where the art and science of data segmentation can really come together to enhance your marketing strategy and content for greater ROI.


About the Author

StrategyDriven Expert Contributor | Rob RistagnoRob Ristagno is the founder and CEO of Sterling Woods Group and a keynote speaker focused on sharing new ways to use data to drive business results. Rob combines his expertise in data science with proven sales and marketing strategies to help established middle-market companies quickly generate new revenue by improving the way they gather and utilize data.

Rob earned his bachelor’s degree in economics from Dartmouth College and his Master of Business Administration in general management from Harvard Business School. He currently lives in Newton, Massachusetts, with his wife, Kate, his daughter, Leni, and his black lab, Royce. For more information, please visit www.sterlingwoods.com.

5 Money Management Tips for Entrepreneurs

StrategyDriven Managing Your Finances Article

As an entrepreneur, you know how important money management is. Both inside and outside of the workplace, it can be the difference between struggling to make ends meet and paving your way for financial success. What’s more, it can be the difference between making and losing a profit. For this reason, money management simply must be a skill that you work on and try to become well versed with regards to.

If you feel that your career as an entrepreneur is being held back by a lack of knowledge on your part in the art of money management, then make sure to check out the five pieces of advice below.

1. Establish personal financial goals and steps to reach them

In order to turn over a profit in your career and grow your entrepreneurial portfolio as a result, you must, first, be able to manage your money on a personal level. Well, if you can’t look after your own money, how are going to be able to look after a business’s or even another person’s?

To learn how to look after your own money, you should establish some personal financial goals. It means setting targets and being proactive in the steps that you take to reach them. Whether this means aiming to have a specific amount of money saved by a particular time, or whether this means spending a certain amount in a week, you should set your targets and put plans into place so that you can reach and hit them. By becoming well versed in the art of goal setting and step taking as a person, you’ll succeed as an entrepreneur because these are skills that are exchangeable.

Something else that you should do on a personal level is to know what your credit score is. You’re never going to get anywhere as an entrepreneur if you don’t know what your rating is. What’s more, you could actually be held back from making future investments based on past discrepancies. It means that knowing where you stand with regards to credit is essential.

2. Get educated

If you want to become a genuinely great manager of money, then you need to educate yourself financially as often and as fervently as you can. It doesn’t necessarily mean taking a course in finance or accounting; this just means throwing yourself into tasks in which you have to be on the ball in a financial sense to stand any chance of success.

A good first port of call is to throw yourself into the deep end with investing and stock markets. By learning all about what it takes to study and manipulate ever-changing financial markets, you will soon understand how to stay afloat financially no matter what financial fiasco comes your way. By educating yourself in regards to bull and bear markets and what kinds of investments can and should be made within them, especially, you will set yourself up for a lifetime of financial strength and longevity. In this instance, you should check out Dr Kent Moors stock picks, specifically the information that details oil investment, as this will help you to have a better grasp on what, how and when certain investments should be made.

3. Learn to crunch numbers

By learning how to crunch numbers, you will be able to make sense of every financial figure that comes your way, which means that you’ll never be left dumbfounded by anything that you come across, and you’ll find yourself missing out on profit far less. To learn how to crunch numbers and reach financial figures easily, spend as much time as you can with your company’s accountants. Also, you could try playing games that rely heavily on one’s ability to read and understand financial patterns, one such game being poker.

Learning how to crunch numbers will also benefit you in your quest to become a great marketer. This is because number crunching will teach you what it takes to translate the impact of trends and then turn them into tangible results for yourself.

4. Become well versed in the art of organization

You’re never going to become an entrepreneur that has a reputation for being great with their money if you aren’t good at organization. It doesn’t just means learning how to organize your money, either. You should treat organization as if it is a way of life. You should know where everything is at all times, and you should know where you have to be at all times too.

In regards to chronicling your financial information specifically, start by organizing everything into categories. Put information of the utmost importance and outgoing payments that are deemed urgent at the forefront of your financial plans, and sums that can afford to be left unattended for a while on the back burner.

5. Find yourself a mentor

If you aren’t a professional accountant or financial advisor, you will struggle from time to time when it comes to money management. Sometimes you’ll feel like you can’t keep up with all of your monthly outgoings and incomings, and sometimes you’ll spend far more than you can afford to. To stop yourself from inflicting irreparable damage on yours or your business’s financial status, you should find yourself a mentor who can guide you. It could mean working alongside an accountant at your firm, it could mean hiring a financial consultant to help you from time to time, or it could simply mean talking to an older friend or relative of yours that has some experience in equity and asset holding.

If you want to be a successful entrepreneur, then learning how to manage money is an absolute must. To do this, you should ensure that your personal finance is as strong as it can be, you should educate yourself with regards to investment, you should learn how to number crunch, you should organize yourself in a business sense and as a person, and you should align yourself with a mentor. By doing all of this, you’ll be well on your way towards being able to handle even the largest sums of money. Lastly, don’t forget to check out https://www.moneyexpert.com/za/ for all the best deals for helpful financial purchases from loans to insurance for your business.